Wall Street Has a Bloodbath of Jobs: Why tech is going through a new wave of layoffs? A keynote lecture by Shulman

“There is a herding effect in tech,” said Jeff Shulman, a professor at the University of Washington’s Foster School of Business, who follows the tech industry. These companies don’t see a reason to stop because the layoffs are helping their stock prices.

If it appears as if a whole sector is going down, it will take the focus away from any single company that has made bad decisions, and will allow for layoffs to be undertaken to make up for them.

Layoffs are contagious. When one major tech company downsizes its staff, the board of a competing company may start to wonder why their executives are not doing the same.

All of the major tech companies conducting another wave of layoffs this year are sitting atop mountains of cash and are wildly profitable, so the job-shedding is far from a matter of necessity or survival.

Whatever is fueling the workforce downsizing in tech, Wall Street has taken notice. The S&P 500 has recorded several all-time records this month, led by the seven technology stocks. Microsoft’s value now surpasses $3 trillion, setting a new record for the company.

The interest rates are far away from the zero rates of the pandemic. And some tech companies are reshuffling staff to prioritize new investments in generative AI. Experts say that those factors do not explain this month’s layoffs.

Shulman adds: “They’re getting away with it because everybody is doing it. He said that they’re getting away with it because it’s the new normal. “Workers are more comfortable with it, stock investors are appreciating it, and so I think we’ll see it continue for some time.”

Tech company workers have returned to pre-pandemic levels and inflation is half of what it was last year.

Last year was, by all accounts, a bloodbath for the tech industry, with more than 260,000 jobs vanishing — the worse 12 months for Silicon Valley since the dot-com crash of the early 2000s.